Disney stock price forecast as DIS tumbles below key support

The Walt Disney (NYSE: DIS) stock price has plunged hard since it published relatively weak financial results in May. After soaring to $124 in March, it has crashed to $100, moving it to a bear market. It is also trading at its lowest point since February.

Mixed picture for Disney

Disney’s business is sending mixed pictures. As with Warner Bros. Discovery, its linear television business is going through a rough patch as the number of viewers and advertising revenue retreats. Its revenue dropped to $2.8 billion in the first quarter from $3 billion a year earlier. 

Disney attributed this crash to lower advertising and affiliate revenue. It also noted that some carriers refused to renew some of its television stations. The company’s content licensing revenue also tumbled to $1.4 billion from $2.3 billion a year earlier.

On the positive side, Disney’s direct-to-consumer business has finally become profitable as the number of subscribers rise. Disney+ core subscribers rose by over 6 million during the quarter while the ARPU increased by 44 cents.

Walt Disney’s experiences business did relatively well in the first quarter as its domestic parks & experiences revenue rose to $6 billion from $5.6 billion a year earlier. Its international business also rose slightly. 

Altogether, Disney’s annual revenue figures have been growing in the past few years. Its total revenue jumped from $65 billion in 2020 to over $88.8 billion in the last financial year. Its revenue in the trailing twelve months (TTM) stood at over $89.2 billion. 

The company has also continued to reward its investors. It repurchased shares worth over $1 billion in Q1 and it expects to continue this trend this year. Also, Disney hopes to generate $14 billion in cash this year and $8 billion in FCF.

There are signs that the company is fairly valued as it trades at a forward PE ratio of 33, higher than the sector average of 33. It also has a forward EV-to-EBITD ratio of 14.7.

The key challenge for the company is that its linear television business and direct-to-consumer businesses will continue slowing in the coming years. Besides, more customers are cutting their cords while competition in the streaming industry is growing.

Disney stock price forecast

DIS chart by TradingView

The daily chart shows that Disney’s share price jumped to a high of $123.80 in April and has now crashed hard to the support at $100. It has plunged below the 23.6% Fibonacci Retracement level.

Disney’s stock has moved below the 200-day Exponential Moving Average, signaling that bears are taking over.  It has also crashed below the first Woodie pivot point. Therefore, the stock will likely continue falling as sellers target the first support at $95.83 followed by $83.93, its lowest swing in January 2023.

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